Can India raise agricultural productivity while reducing groundwater and energy use?

Abstract

This paper provides empirical evidence that power tariff reform with pro rata pricing and higher unit rates for electricity not only would promote equity, efficiency and sustainability in groundwater use, but also would be socio-economically viable for small-holder farmers. It shows that the arguments of “high transaction cost” and “political infeasibility” used against metering are valid only in specific regional contexts and under increasingly outmoded power-pricing and agricultural-production regimes, if one considers the recent advancements in remote sensing and the facts that overexploited regions have a low density of wells and are mostly owned by farmers who constitute a small segment of the farming community.

Keywords:

• pro rata pricing
• energy rationing
• groundwater-electricity nexus
• water productivity
• prepaid meters

Notes

1. One major reason for this is that the hard-rock areas, where well density is high, have extremely low groundwater potential due to low rainfall and low infiltration of rainwater. But the cost of drilling wells is low, and therefore most farmers own wells, though irrigating only small patches of land. In the deep alluvial areas, where well density is very low, the yield of aquifers is very high and the irrigation potential of deep tube wells is very high. But because the cost of drilling tube wells is prohibitively high, fewer farmers can afford it; the farmers with deep tube wells sell water to the well owners who do not own deep tube wells.

2. The monopoly price ratio, which is used to express the monopoly power of sellers, is defined as the ratio of the selling price to the cost of production and supply.

3. Though the net returns per unit of land were marginally lower for farmers who paid on a pro rata basis in north Gujarat, this is not a concern, because in water-scarce regions like north Gujarat farmers would not have land constraints in maximizing returns. Even if the farmers attempt to expand the area to maintain the net farm return at the previous level, the aggregate water usage would still be lower than the previous level.